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Wednesday, January 21, 2015

Alnylam Raises Another Half a Billion as It Rolls Out Cardiometabolic Program

There has been some confusion today why Alnylam would raise
another half a billion dollars when it already has one billion in liquid
assets. The answer has probably to do
with their newly formed cardiometabolic franchise (aka STAr), the first candidate from
which, ALN-PCS, has just entered the clinic.

With a delivery platform that enables monthly to quarterly
dosing for gene targets in the liver, RNAi can no longer be thought of as a
mere second-line alternative in diseases with existing therapies or where there
is direct competition with much-touted monoclonal antibodies for extracellular proteins.

For example, earlier this year, Alnylam reported early, but
highly suggestive data for its subcutaneous hemophilia candidate ALN-AT3 which supported
that it will work as beautiful as the genetic model behind it, and due to its
monthly dosing regimen has to be considered a potential first-line therapy in a
market where transitioning to weekly intravenous infusions with complex
recombinant proteins is already considered progress.

Based on the non-human primate data, ALN-CC5 (going up
against Alexion’s fabled Soliris) and ALN-PCS are no different.

First cardiometabolic pearl: ALN-PCS

While all the focus in the PCSK9 space is currently on the
monoclonal antibodies which are marching towards approval, ALN-PCS looks like
it could shake up the market. While up to 50-60% LDLc reductions can be expected with both the monoclonals and ALN-PCSsc,
once-quarterly regimens appear feasible with ALN-PCS. By contrast, the most advanced
monoclonal antibody, alirocumab by Regeneron/Sanofi, struggles with achieving stable
pharmacodynamics with just monthly dosing.

Amgen’s evolocumab may be doing slightly better for the most part with
monthly dosing, but there is still the challenge of patients with high starting
levels of PCSK9- and it is still monthly and recombinant protein versus
potentially quarterly and synthetic molecule.

Given that the target patient population for the PCSK9 class
is expected to be in the tens of millions, clinical development for hard end points such as cardiovascular events
would obviously cost a lot of money.

In the case of ALN-PCS, it is The Medicines Company that has to shoulder the costs for now. This is because it exclusively licensed
ALN-PCS from Alnylam around 2 years ago for just $25M and modest biobucks. This deal was a great oddity because part of
the reason why The Medicines Company
had to pay so little is that the expectations was that ALN-PCS, at the time
still the intravenously administered liposomal version ALN-PCS02, would only be used in
select patient populations, such as those hospitalized with a need for rapid lipid
lowering.

This profile would have obviously matched a hospital
specialty company like MDCO better than a drug with the profile of ALN-PCSsc.

In terms of value, however, I believe that ALN-PCS already
is worth more than MDCO’s market cap of ~1.6B which is a function of IP issues around lead drug Angiomax and some of the more recent hospital-focused
niche products it has been frantically acquiring in an effort to fill the hole should Angiomax go generic this year.

Therefore, should the phase I results in mid-2015 support a
first-in-class profile for ALN-PCS, something will have to give: either The Medicines
Company splits up into a PCSK9 company and a hospital-focused entity, or (more
likely) it will dispose of ALN-PCS- how about to Alnylam which would love to
have it back and become the heart of the new cardiometabolic franchise?

Note: I consider MDCO the best risk:reward opportunity in biotech 2015.

NASH, diabetes, dyslipidemia

In addition to fighting bad cholesterol by knocking down
PCSK9, some of the newly raised money will be directed at other large dyslipidemic
opportunities, (type II) diabetes, and the increasingly hot non-alcoholic
steatohepatitis (NASH) indication. Given
its central role in system-wide metabolism, the liver is rich in targets and
being able to go after every protein-coding gene alone and in combination
greatly increases the odds that Alnylam (or ISIS Pharmaceuticals) come up with category-busting drugs.

I believe Alnylam was right in doing the capital raise and it could
well accelerate development of the new franchise and, partly depending on the
outcome of the phase I study with ALN-PCS, result in another Genzyme-type
billion dollar deal next year around JP Morgan.

Read the Xconomy timely interview with Alnylam's CEO John Maraganore which further details some of the thinking here.

On smh.com.au the other day the following article was posted with this opening passage.

A string of high-profile setbacks may have whittled away support for biotechnology companies but executives and analysts say there is still plenty of money from overseas, and the weak Australian dollar may spur a series of takeovers by foreign buyers.

On Tuesday, Pfizer are due to present their Q4 figures. For a CEO to stand before the market to present data while ignoring the AZ elephant in the room would suggest contempt.

Davos winds up on the Friday ahead of the PFE presentation. Davos is to be attended by pharma execs and bankers.

ALNY conducts a $0.5bn cap raise. TKMR strikes terms with Oncore. Soon after begins HBV trials. RGLS is due to release data very soon with perhaps a few people of privilege already having had a peak. Mr. Kolchinsky is seen to be doing an impersonation of a ventriloquist.

I would suggest that issues surrounding patent matters will be resolved at Davos allowing PFE to make a statement about how to fill the void left by AZ. That all other matters pertain to filling this void. Including, the cheaper Australian exchange rate.

So Dirk, in your opinion can we expect to see PFE, ALNY or both make a move on Australian biotech?

In October, Chief Executive Officer Ian Read said he felt pressure to do a deal to bulk up the innovative part of the business. The loss of key patents for blockbuster drugs has left Pfizer with some revenue holes to fill. “Certainly I feel a sense of urgency on utilizing our balance sheet and our capital to do deals that are incremental, add incremental value and certainly add revenue growth in the innovative space,” Read said on a conference call with analysts in October. “We are aggressively looking at all alternatives.”

When considering things like Davis, TPP, Australia Day or whatever else, if anyone is waiting for anything to happen in the US from Pfizer or anyone, then typically you need to wait til after Super Bowl at least.

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